Some investors in India's booming e-commerce industry are starting to curb their enthusiasm as valuations reach lofty levels.

Morgan Stanley Institutional Fund Trust marked down 27 percent of its stake in Flipkart, India's answer to Amazon, during the December quarter, according to a Friday filing with the U.S. Securities and Exchange Commission (SEC).

The regulatory filing showed the Morgan Stanley fund reduced its valuation of Flipkart from $80.6 million as of June, 2015 to $58.9 million in December 2015. The bank owns 566,827 shares in Flipkart. The mark down meant the value per share fell from $142.23 a share in June to $103.97 a share in December.

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The move by Morgan Stanley highlights how investors are increasingly skittish over tech valuations in general. The fund also reduced the value of its holdings in U.S. tech firms Palantir Technologies and Dropbox.

The markdown also reflects that India isn't immune to ructions elsewhere, despite favorable demographics and a market where large chunks of the population haven't shopped on the internet yet.

"This is something that many Indian startups are afraid of because Flipkart is the leader of the pack. Any negative sentiment around Flipkart is bound to create a negative impact on other startups " Bipin Preet Singh, CEO of Indian start-up MobiKwik, told CNBC.

"When there's too much money chasing a few companies, valuations go out of hand," Singh said, adding investors remain bullish in India's medium to long term prospects although in the short run, new money, even with lower valuation, will be hard to come by.

Morgan Stanley did not give a reason for its mark down. Flipkart did not respond to an email request for comments.

Late last year, reports said Flipkart was valued at $15.2 billion and Morgan Stanley's mark down pushes that value down to $11 billion for the Indian startup.

Amit Anand, founder and managing partner of Singapore-based Jungle Ventures, said the markdown was not a surprise as this is happening to many companies across the board. But such a move will not have too much impact on the Indian startup scene as alternative sources of funding exist.

"I think the ecosystem is still very, very healthy," he told CNBC. "There is enough venture capital money, local money, and other sources of capital sources."

Flipkart is engaged in a fierce competition with other e-commerce giants Snapdeal and Amazon India to tap into the country's growing number of online shoppers. Often this is done through extensive discounts.

The companies are betting on India's e-commerce market continuing its frenetic run as millions of customers switch to smartphones and increasingly embrace online shopping.

"There's still a lot of buyers to be added in the next two to three years," Satish Meena, an analyst at Forrester, told CNBC. According to Meena, around 1 percent of India's retail sales is online now and expected to reach 4-5 percent in the near future. When it comes to buyers India had around 50 million buyers as of 2015 and this may cross 100 million in next 2-3 years, Meena added.

Anand said Flipkart and its competitors have set themselves up for a rapid growth that needs more short-term capital in an environment where investors are stepping back to let their portfolios cool down.

The lack of easy access to capital will force the likes of Flipkart and Snapdeal to think of more efficient ways to maintain their market share, instead of relying on the discount model.

Meena reckoned they need to focus on developing infrastructure and moving out of India's Tier 1 cities such as Mumbai and Delhi.